Kendall Jenner, Curation, and Machine Learning: An Update from Revolve Group

Machine Learning

Revolve Group, the operator of leading e-commerce platforms Revolve and FWRD, has carved out a unique position in the fashion industry by combining innovative brand partnerships with cutting-edge technology. FWRD offers a curated collection of iconic luxury and emerging brands, while Revolve similarly offers a curated assortment of premium apparel, accessories and beauty products at low prices. The company recently opened its first store, marking its entry into the omni-channel realm.

Facing unprecedented challenges and opportunities, Revolve Group stands out in a competitive marketplace with its data-driven strategies, influencer collaborations and commitment to customer experience. The appointment of Kendall Jenner as Creative Director of FWRD, exclusive capsule collections and advanced search features are great examples of how Revolve Group continues to adapt and grow. In this discussion, Kai Li, SVP of Revolve Group, revealed the key elements of Revolve's success and laid out a blueprint for other retailers looking to navigate the complexities of today's retail world. Inside Retail: How does Revolve work with brands? Kai Li: If you go back 10 years ago, a big part of how we work with brands was through [would] Identify your brand [was by sending] Today, 10 years later, we are recognized as a launch pad for emerging brands in the US. Most of the new brands that Revolve discovers come from people coming to us. Influencer and celebrity endorsements allow us to look at brands more closely, and celebrity brands have a higher chance of success. Revolve is successful today because of two main elements: the fashion element and the data element. IR: How does Revolve leverage data in working with brands? KL: The decision of how much to buy from a brand and how long to stock it is driven by data. We are very data-driven. We know if a brand and product will sell well within 48 hours. When we publish online, we analyze page visits, conversion rates, time on page. A lot of data points tell us if a product is good or bad. Influencer and celebrity endorsements can help brands break into the market, but ultimately, it needs to be proven and backed up by data. There are a lot of great brands that offer great products, but most of them don't understand the importance of the service element. A good product is only 50% of the job. The other 50% is achieved through good customer service and other factors. At Revolve, we excel at both, and that's why we're successful. IR: How does Revolve provide the best customer experience on FWRD and the Revolve site? KL: It's all through curation. The selection on both sites is different, and we carry a lot of ready-to-wear. Kendall Jenner is the creative director of FWRD. It's hard to differentiate in the luxury market without having a brick-and-mortar store, but our approach is a unique selection perspective. IR: Tell us more about your thoughts on appointing Kendall Jenner as creative director of FWRD in 2021. KL: Her appointment is in line with her career goals. Will it last long? I don't know if it's five or ten years, but she's been there for more than two years. The benefits of this appointment come from a variety of areas, including increased customer awareness and improved reputation. When talking to traditional European brands, her relationship helps us show off our marketing power and gain trust and recognition. This ensures more exclusive brands want to be a part of Revolve's marketing efforts. These are the benefits that come from different angles. IR: Are there any exclusive collections or products on the site to enhance this curation and experience? KL: We have a lot of exclusive capsules. I think what we're really trying to create from an online perspective is a unique selection that you don't normally see, and this is fueled by the patronage of our European customers. If you look at the FWRD market data for Europe, it's actually interesting. All of our products come from Europe, and we think there's no market there. But we're actually selling pretty well in Europe. If you look into it, we have a unique selection and the products that we pick are ones that maybe aren't available locally. Product discovery on Revolve is an element that we focus on, and the product recommendations that you see on the page for one item complement that. It makes it easier for customers to shop, and it improves conversion rates. IR: How does technology accelerate this process? KL: It's machine learning. I come from a tech background, so it's hard to say AI. Machine learning helps us best understand natural language searches when customers are on the site looking for a specific product. This is combined with additional search features, such as icons for different lengths and types of dresses, to refine searches. We are probably the only company that offers tools to help customers find what they are looking for. The problem with machine learning is that it mostly works, but the 5% that don't really frustrate customers. What we want to provide is a consistent experience that helps customers find the exact product. We found that layering a traditional approach on top of machine learning is the best way to do that. IR: Do you have any data or insights on brands that have resonated with Revolve customers? KL: Hersa, the fashion brand from former Victoria's Secret Angel Elsa Hosk, launched in 2022 at FWRD in partnership with Revolve Group, and collections have seen phenomenal success on Revolve sites every time they are released. IR: Have customer reviews changed the way you operate at Revolve? KL: Customer feedback is invaluable. We had a customer from France last week, and we could see that she was just frustrated, so we addressed her directly. She pointed out issues with the returns process. We apologized and addressed the flaws she pointed out to improve our service. Reading customer feedback helps you improve beyond just the surface level. IR: How do exchange rates affect pricing? KL: Exchange rates have a big impact on pricing and sales. Generally, for every 1% change in exchange rates, sales increase or decrease by 2.5%. Retention is the secret to compound growth over time. Higher retention rates lead to significantly higher revenue and growth. Sellers with a 40 percent customer retention rate have 2.3 times the compound annual growth rate compared to sellers with a 20 percent customer retention rate. There are many ways to improve customer retention. In addition to the usual loyalty programs, improved price, service, assortment, and customer engagement also help improve customer retention.

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